Government docks fixed-price invoice for failure to perform hours, COFC agrees

Here’s a smack in the face to all the faux-fixed-price contract holders out there: the Court of Federal Claims found the government was within its right to unilaterally deduct hours not performed on a firm-fixed-price contract.

In Pacific Coast Community Services, Inc. v. United States (Fed. Cir. 2020-1219), the Department of Homeland Security’s Federal Protective Service issued a contract for five FTEs across four CLINs. The contract specified the number of working hours per FTE (1,888) and included the commercial payment clause included in 52.212-4. A fifth CLIN allowed for overtime hours.

After beginning performance, FPS required Pacific Coast to perform 2,000 hours per FTE, with no allowance for absences. Pacific Coast submitted a claim to the contracting officer, complaining the increased hours, and indeed the requirement for performance of any number of hours, was incomptaible with a fixed-price contract. Pacific Coast then rejected FPS’s settlement offer that only bridged the gap between the number of hours in the RFP (1,888) and the 2,000 hours the CO now required.

The contract contained a number of time-and-materials-like requirements, such as specifying the number of FTEs and hours, allowing specific holidays and break time, and a CLIN for billable overtime. In short, the court found that form cannot trump content, and that FPS was within its rights to deduct nonworked hours from Pacific Coast’s invoices, muddying the meaning of “fixed price” and increasing the importance of understanding a contract’s terms and conditions before signing.